Negotiation Strategies Online and Offline

Gillian Ku, Professor of Organizational Behaviour at London Business School, teaches and researches on the strategies and tactics that can be used to best advantage in a range of different negotiating situations. She affirms that negotiating in a virtual context is inevitably more complicated, particularly if the negotiation is contentious. To help mitigate the complexities, negotiators should plan thoroughly.

Ku splits negotiations into two broad groups—distributive and integrative. The former is a simple negotiation where there is a single issue and a fixed ‘pie’, where the outcome is a share of a ’fixed-sum’, so your gain is the other’s loss, and vice versa. The classic example might be haggling for a souvenir in a street market, where the only variable is the price paid for the object.

Creating amity, and not enmity in the deal negotiations is a valuable thing to achieve

Integrative negotiations have many more layers and consequently carry increased complexity. If done well, these types of negotiations can offer ‘winning’ outcomes for both parties. Ideally, there will be trade-offs—for example, if A values X more highly than B does, and vice versa with Y, then A should get X while B gets Y, making both parties better off. These win-win outcomes can be achieved through value-creating, cooperative strategies—seeking common ground through clarity and honesty, sharing information and exploring alternative routes to get to a successful outcome for both. In more complex, multi-issue negotiations it is highly likely that some form of on-going relationship will be required, so creating amity, and not enmity in the deal negotiations is a valuable thing to achieve.

Regardless of whether you are dealing with distributive or integrative negotiations, Ku advises that you be clear on your own objectives at the outset. So, identify specific, ambitious, yet realistic goals for yourself. This needs to be under-pinned by a knowledge of what you are going to do if you do not feel that a negotiated outcome is acceptable to you. What is your BATNA—your ‘best alternative to a negotiated agreement’? If you do not know what your BATNA option is, then you cannot know, when faced with an unappealing offer, whether you should walk away or accept it—as you will have no gauge to measure it by.

Ku says she is often asked by students who have received only one job offer, how they can have a BATNA when they have no alternative offers to consider—but there are always alternatives, they may not be as good, but they are there; the students could look at other job sectors, wait for another offer to come in, start on their own. Understanding their BATNAs is vital to making a clear decision.

Connected to your BATNA is your reservation price. This is the floor of your negotiating stance, and the level at which you are clear you will walk away with anything less—and this will often be relative to your BATNA.

Understanding your reservation price is clearly simpler in a distributive negotiation than in an integrative one. For the latter, Ku’s recommendation is to develop a metric by which you can ‘score’ the various different layers and elements of a negotiation across, including the non-numerical ones, so that you can measure and identify where the optimum deal lies.

Perhaps as important, is to try and understand the other party’s reservation price, as this clarifies for you how far you can push them, before they will walk away.

To create win-win situations in integrative negotiations will take strong relationship building, paving the way for information to be shared—and as with so much in business, this comes down to developing a basis of trust between the parties. Ku describes the research on trust that shows it is founded on three critical elements:
1) Acting with integrity;

2) Having competence, and;

3) Displaying a benevolence more widely.

Not coming across as ruthless and self-obsessed is the very least you can do to create a trusting environment. Generally, trust is built incrementally, but it can be jump-started, says Ku—by a grand gesture, a leap-of-faith, from one party to another. This inevitably will involve a certain amount of risk, but at the outset of the negotiation there is time to walk away if it is not reciprocated or at least rewarded.

Negotiating by phone, or even just email, is a recipe for misunderstanding and misinterpretations of intentions

All of these actions are much more difficult to achieve in a purely virtual negotiation, Ku explains. Before video-conferencing was widely accessible, this was even more the case. Negotiating by phone, or even just email, is a recipe for misunderstanding and misinterpretations of intentions. Today with the omnipresence of Zoom and its peers, we are able to get a better reading on people’s body language and facial expressions to help us build an idea of their intentions and follow the visual clues that allow us to judge people. Although it should also be said that we are generally less successful at detecting lies through body language, than we might think.

Typically, these drawbacks can be managed by being even clearer in your communications. Send emails outlining your proposals beforehand so that details can be explained in the discussion. Keep your own team close by while the on-screen discussions are taking place, to act as both sounding board and enable swift follow-on if you need to refer to them. Also, Ku advises, to set the tone of the meeting to allow some time for informal, trust-building conversation before the main agenda is focused on. This requires a longer online session, but it can pay dividends in building that relationship.
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You can watch Gillian Ku’s Webinar on Negotiation Fundamentals for Business Leaders here.

If you would like more information about how London Business School helps organizations with their executive development, please feel free to contact Gabriel Muzas.